Yahoo Japan's Google Deal Godzillas Microsoft
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Yahoo Japan has apparently agreed to use Google for its back-end search and advertising system, according to online reports. For Microsoft, the news must be something of an unexpected blow, considering that its 10-year search-and-advertising agreement with Yahoo is currently in the midst of implementation; although Yahoo's U.S. corporate mother ship only owns about 35 percent of Yahoo Japan (says Bloomberg), you'd think that the sheer magnitude of the agreement would be enough to sway even the most recalcitrant franchise into preemptively jumping onboard the Bing wagon, right? Right? Wrong, I guess. "At the present time, we feel there are quite a few areas where Microsoft is not yet ready," Yahoo Japan Chief Executive Masahiro Inoue told the media during a news conference in Tokyo, according to The New York Times. "Google is one step ahead in Japanese-language services." For its part, Microsoft seems furious. "This agreement is even more anti-competitive than Google's deal with Yahoo in the United States and Canada that the Department of Justice found to be illegal," Brad Smith, Microsoft's general counsel, said in a statement currently drifting around the Web. "The 2008 deal would have locked up 90 percent of paid search advertising. This deal gives Google virtually 100 percent of all searches in Japan, both paid and unpaid." Under the terms of the search-and-advertising agreement, Bing will power back-end search for Yahoo's online properties, while Yahoo takes over worldwide sales force duties for both companies' search advertisers. Microsoft's AdCenter platform will power search advertising for Yahoo, as well. Both the U.S. Department of Justice and the European Commission cleared the agreement in February. Microsoft likely hopes that the deal will result in Yahoo's search-engine market share porting over to Bing with relatively little attrition. But this brouhaha with Yahoo Japan suggests two things: a.) Yahoo's global presence is too fractured, with too many other players possibly owning their own little pieces, to make such a transition uniform, and b.) Microsoft may face a very steep uphill battle as it tries to increase Bing's market presence into new international markets.
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Comments (4)
I can't stop laughing. Microsoft is furious over Google's monopolistic tendencies. How thick is the irony in THAT one? It sounds as though there is a very competent argument for Japan Yahoo preferring to work with Google over Microsoft in this case - it's a better product for the Japanese market! No one is saying that they were bribed or bullied into the decison. Maybe that's why Microsoft is so incensed, because they couldn't bully Yahoo Japan into going with Bing. The issues may be more complex than I'm seeing, but I'm just wondering about the evolving international busines landscape and wondering whether some multi-nationals of U.S. origin are not as well-equipped to compete as they think.
Posted by frolic | July 31, 2010 5:22 PM
Put yourself in the place of Japan Yahoo, and you start to see their reasoning. Japan Yahoo has the majority of the search biz there, with Google in second place with only somewhere in the thirty percent figures. Bing is going nowhere there.
If you are Japan Yahoo, do you take a chance on Bing to power your business, a search engine in the low 1 or 2% at best in Japan? I think not, unless you want Google to kill you quickly.
That is the problem, no matter how much money and promotion Ballmer lavishes on Bing, people really do not want to give up better search engines like Google and the former Yahoo. A lot of people are aware of the skewed search results that MS provides to further its business interests in Bing. Also, Ballmer and Microsoft seem to be very cozy indeed with the censorship in Red China with Bing. I have to wonder, if Ballmer would sell it his own mother?
Posted by Chips B. Malroy | August 2, 2010 11:35 AM
I can't stop laughing. Microsoft is furious over Google's monopolistic tendencies. How thick is the irony in THAT one? It sounds as though there is a very competent argument for Japan Yahoo preferring to work with Google over Microsoft in this case - it's a better product for the Japanese market! No one is saying that they were bribed or bullied into the decison. Maybe that's why Microsoft is so incensed, because they couldn't bully Yahoo Japan into going with Bing. The issues may be more complex than I'm seeing, but I'm just wondering about the evolving international busines landscape and wondering whether some multi-nationals of U.S. origin are not as well-equipped to compete as they think.
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